Category Archives: Mutual Fund Commentary

April 1, 2019

By David Snowball

Dear friends,

It’s been an especially distressing month. Rapid and widespread flooding following a hard winter destroyed the lives and livelihoods of many thousands of good folks in eastern Nebraska and western Iowa. Levees failed, bridges and roads were swept away, homes and equipment left mangled. Many are in despair at the loss of thousands of newborn calves, with loss to private and public property exceeding a billion dollars. At the same time, Cyclone Idai, the second-worst in the region’s history, swept across eastern Africa, likely killing more than a thousand and leaving hundreds of thousands homeless and hungry. While it is only “weather,” persistent patterns in the weather define our climate and the pattern of the past five years has been increasing numbers of extreme weather events.  We really need to work together to figure out how best to manage these challenges.

Speaking of challenges, presidential wannabees are beginning to Continue reading →

Death Cleaning my portfolio

By David Snowball

Or, since I teach at a historically Swedish-Lutheran college, I might use the original Swedish term: I was döstädning my portfolio.

By way of background, my income comes from teaching at the aforementioned Augustana College; it’s exceedingly secure but has not increased much, in real or inflation-adjusted terms, in quite a while. It has “bond-like” qualities. I invest about 13% pretax for retirement, the college has a match that adds about 10% and I squirrel away around 10% of my take-home pay each month. Our home in Davenport is small, snug and affordable. Our cars are used but clean and efficient. Our splurges often enough involve live music and Continue reading →

Learning from the fall fall

By David Snowball

The last substantial decline in the US stock market occurred between 2007-09. Vanguard Total Stock Market Index Fund (VTSMX) declined by 50.9% and remained under water for 52 months. Vanguard International Stock Market Index (VGTSX) fell 58.5% and did not recover for 114 months. Investors in Vanguard Emerging Market Index (VEIEX) would be at least a little envious of the fact that VGTSX investors were in the red for almost ten years, since they were at a loss for more than 10 years after their portfolio hit bottom. Investors who hewed to the “stocks for the long-term” mantra and faithfully held their VEIEX shares ended the decade with an average annual loss of 0.1%.

The good news is that Continue reading →

ETFs and the fine art of propaganda

By David Snowball

I teach about propaganda and persuasion for a living. “Propaganda” in the Hitler, Goebbels, rise of the Nazis sense of the term. It’s an important and fascinating study, though it seems reasonably tangential to contemporary investing.

Then I started reading about ETF marketing.

The Institute for Propaganda Analysis, 1937-1942, was an honest attempt to help American citizens detect and dissect Continue reading →

Finding ESG Fund One

By David Snowball

By Morningstar’s calculation, there are 486 “socially-conscious” funds.  While bond and mixed-asset funds can be “socially-conscious,” Morningstar does not rate the sustainability of their portfolios. If you subtract the 183 funds in those categories, you’re left with 303 “socially-conscious” equity funds. Only 93 (or 31%) have portfolios that score “high” on Morningstar’s sustainability ratings while 101 more are “above average,” so about two-thirds of ESG funds earn good-to-great sustainability scores.

At the other end of the spectrum, 18 (about 6%, including one with “environmental” in the name) have the Continue reading →

Briefly Noted . . .

By David Snowball

Each month we share developments in the industry that are, individually, to minor to warrant their own story. Since about three-quarters of it are stories of failure and the subsequent thrashing about, it mostly gets downplayed. This month saw, in particular, the liquidation of a lot of funds that were trying to deal with a low-interest rate, high stock valuation world: their names invoke global allocations and global bonds, alternative and unconstrained income, flexible opportunities and the occasional quantamental bent. Continue reading →

March 1, 2019

By David Snowball

Dear friends,

It’s spring and it’s about 10 degrees above zero here which means it’s Spring Break at Augustana College! Winter term on Augie’s singularly bizarre academic calendar runs from roughly Halloween to Valentine’s Day, gulping down Thanksgiving, Christmas, and New Year’s along the way. We offer, I suppose, the antithesis of the old MTV spring break beach parties with raucous guys dancing with girlfriends clad only in whipped cream. Nope, Swedish-Lutherans we, we hand the kids their parkas and urge them to go off and have a good time, but just Continue reading →

The Investor’s Guide to the End of the World

By David Snowball

Human actions are causing our planet’s climate to become increasingly unstable. We are beyond the point where that fact is open to debate. Most Americans, Republicans and Democrats both, now accept the reality of climate change. That’s based on fascinating data visualizations provided by the Yale Program on Climate Change Communication. Republicans, far more than Democrats and others, are unsure that there’s a human role or that scientists have reached agreement on what is happening.

The short version is that every serious inquiry reaches the same conclusion: the climate Continue reading →

Vanguard – Going, Going, Gone!

By Ira Artman

January 2019 will be remembered by mutual fund and Vanguard investors for a few things.  Besides the stock market recovery that largely reversed the year-end 2018 selloff, the following two things occurred:

  • On January 16th, John Bogle, age 89, died in his home in Pennsylvania. Mr. Bogle’s efforts on behalf of indexing and individual investors were widely honored and remembered.
  • On January 22nd, Vanguard created the PDF for the Wellington Fund Annual Report, dated November 30, 2018.  The US Postal Service distributed paper copies of this report during the first week of February.

Continue reading →

Launch Alert – DoubleLine Colony Real Estate and Income Fund (DBRIX/DLREX)

By Dennis Baran

On December 17, 2018, DoubleLine launched the DoubleLine Colony Real Estate and Income Fund. It seeks capital appreciation and income with returns in excess of its benchmark, the Dow Jones U.S. Select REIT Index over a full market cycle. The managers will use derivatives to create investment returns that approximate the returns of the newly-launch Colony Capital Fundamental US Real Estate Index. To the extent that there’s additional capital available, they will also invest in an Continue reading →

Briefly Noted

By David Snowball

Updates

The Ghost Ship sails every onward. Voya Corporate Leaders (LEXCX, once Lexington Corporate Leaders) continues its skipperless voyage. The fund was launched in 1935 with a simple strategy (buy an equal number of shares of what were then America’s best companies, and never sell) and no manager. Right: no manager changes in more than 83 years ‘cause it’s had no manager in more than 83 years. How’s that working for Continue reading →

February 1, 2019

By David Snowball

Dear friends,

Please join me in bidding a fond adieu to January. It was a month in which our increasingly unstable global climate manifested itself in record-breaking cold and snow. Davenport, Iowa, my adopted hometown, saw the lowest temperature (-33, six degrees colder than the old record) and coldest wind chill readings (-54) in its recorded history. Despite having no precipitation in the first eleven days of January, it still managed 30.2” of snow by month’s end, the most since record-keeping began in 1884. Local drivers responded Continue reading →

The long and short of a defensive fund

By David Snowball

People bandy about the phrase “long/short fund” as if it had meaning. It does not. It is, instead, a catch-all term  that includes funds with very different objectives and very different strategies, including some funds that do no shorting at all. Some short individual stocks, some short groups of stocks through ETFs and others short entire markets. Some are market-neutral, some are permanently defensive, some switch between defense and offense, others are always playing offense.

A 2013 analysis of all funds listed as “long/short”  in Morningstar’s database by Long Short Advisors found “just 25 funds that are Continue reading →

Grandeur Peak reopening: the limited time offer

By David Snowball

On January 14, 2019, Grandeur Peak announced the partial reopening of four of their funds: Global Opportunities, International Opportunities, Global Reach and Emerging Markets Opportunities funds. The first three had been hard closed, while the last had been soft-closed. Under the terms of the reopening, the funds are open to additional purchases by existing shareholders but also to new shareholders willing to purchase the funds directly from Grandeur Peak Funds at www.grandeurpeakglobal.com.  Financial advisors and retirement plans with clients in one of these funds will be able to continue investing in the fund for both existing as well as new clients.

Long-term investors should take this opportunity seriously. Continue reading →

Launch Alert: FPA Flexible Income Fund (FPFIX)

By David Snowball

On December 31, 2018, FPA launched FPA Flexible Income Fund (FPFIX). The fund seeks to provide long-term total return, which includes income and capital appreciation, while considering capital preservation. This marks FPA’s first new bond fund since becoming adviser to FPA New Income (FPNIX) in 1984. Morningstar celebrates New Income for “a strong management, process, and risk/reward profile and has been a safe haven from losses and bond-market excess.” FPA hopes to leverage those virtues by applying them to a fund that has permission, but not the obligation, to follow a modestly more aggressive path.

FPA tends to be the home of absolute Continue reading →

Briefly Noted

By David Snowball

Updates

Effective January 1, 2019, Castle Financial & Retirement Planning Associates discontinued its voluntary fee waiver for All-Terrain Opportunity (TERIX) and will not seek reimbursement of any fees it voluntarily waived.

Welcome back to our readers employed by the Securities and Exchange Commission! The whole “shut the government down” thing struck me as unproductive lunacy and ended up with a number of our readers (most visibly the SEC folks) furloughed. Continue reading →

Optimism is not always the answer

By David Snowball

But, it is, in general, the best place to begin the search for the answer. Optimists, who assume things will work out, tend to see more paths forward, more options worth considering, than pessimists (often dubbing themselves “realists”) who know that it’s eternally time to duck-and-cover.

The word “optimism” entered the English language (1759, in French 1737) several generations before pessimism (1794) did. 

The psychological research on Continue reading →